My previous 5YP had nothing to do with building a Gentleman’s wardrobe. And yet without the success of that 5YP it is unlikely that I would have begun the subsequent project. It ran from 2002 to 2007 and had a very simple object; the elimination of my debts.
As I have mentioned in a number of previous posts I am a man of modest means. However, it should be obvious by now that I am also a man of ambitious aspirations. Those two facts can often lead to difficult situations. Or financial ruin.
By 2002 I had unsecured debts to my name which had amassed to over £20,000. Around 22K to be more precise. My wife also had debts of a smaller magnitude so between us we owed a lot. Something needed to be done.
How had I got there you ask? Well we had never been people with ‘loadsa dosh.’ When my wife married me I was unemployed. Worse, I was a student. So not only did I not have an income I had student fees to pay. Still, I wasn’t in debt at the time, it simply meant that every penny I had went to pay student fees.
Within a year I had completed my studies, or at least that phase of them. And we had some small debts but nothing to worry about.
It was the arrival of children a year later that did it. Or at least it provided a good excuse to spend money we did not yet have to indulge an almost irresistible nesting urge. Your first child will often have that effect on parents to be. We could always pay this back later. And so our debts grew. Research suggests that we Brits are at our most indebted between 20 and 30.
Some of the debt was the result of good decisions which had a financial impact. For example, we decided after our first child that if we were blessed with a second my wife would take at least year off work in order to focus on the family. This was in the days before maternity leave legislation allowed women the right to take a year off and retain their employment. So that decision meant resigning from employment at the end of maternity leave. It was absolutely the right decision for us as a family. But there was a financial cost.
However, some of the debt was the result of not so clever decisions. I had bought a car without quite intending to (that is a whole other story) earlier in 2002, when frankly I didn’t have the best financial foundations to do so and a large proportion of the 22K of debt was that car loan.
The thing is, I am instinctively debt averse. Some people can relax when they have debts. They are pretty chilled out about it. Others of us, can’t quite relax, whilst in debt, even if we are servicing our debts efficiently. It’s not the ability to make the monthly payments that keep us up at nights. Rather it is the very idea of being indebted itself.
So looking at that total indebtedness of 22K, made up of loans and various credit cards, it was clear that something needed to be done. That is when the 5 year project began. As with my more recent 5YP I didn’t know it would take 5 years to complete when I began. However that became more evident as time went by. The only thing that I did know for certain was that I wanted to get to a position of being debt free, however long it took.
It turned out that it took 5 years. By December 2007 the debts were repaid. One of the consequences of that hard work was that I neglected my wardrobe. Happily, that my debts were repaid meant that there was a little money in the system to be able to address that situation.
Look out for future finance posts in 2014